Molten Ventures - A compelling story at an attractive discount

Molten Ventures continues to deliver strong returns, fully meeting its guidance for FY22, though the current environment is clearly more challenging than the buoyant conditions seen in 2021. The group is in the process of raising its growth fund and is also looking to extend its debt facilities to ensure that it can take advantage of new investment opportunities in FY23. Underlying portfolio performance remains strong (averaging above 65% y-o-y revenue growth for the core portfolio). NAV/share is expected to be not less than 929p, up 25% y-o-y, delivering a five-year CAGR FY17–FY22 of 22%. However, FY22 was a year of two halves, with NAV/share up 19% in H122 and 5% in H222. At the latest closing price of 704p (28 April), the shares are trading on 0.76x FY22 NAV. Gross portfolio value (GPV) is expected to be not less than £1,529m, up 55% y-o-y, implying a gross portfolio return of 37% (versus guidance of 35%) post a net investment of £185m for the year. Building third-party FUM to increase fee income remains a key priority for FY23, with management confirming that plans for the growth fund remain on track. A 22% five-year NAV/share CAGR coupled with a material discount to NAV should make Molten Ventures particularly attractive to long-term investors.